Famous Ponzi Schemes   

What are Ponzi Schemes?

The term "Ponzi scheme" comes from Charles Ponzi, who tricked 40,000 people to invest $15 million dollars with him over a period of nine months between 1919 and 1920. Ponzi's scam, originally known as a "Robbing Peter to Pay Paul" scheme, involved using money from new investors to pay earlier investors. Early investors got their money back, which attracted new investors eager to place their money with Ponzi. The only actual investment was into Ponzi's pocket, as the "returns" came from new investments.

Unfortunately, Ponzi was not the last scammer to use the scheme that now bears his name. Over the years a number of famous Ponzi schemes have robbed investors of billions of dollars. BusinessInsurance.org can help you achieve a degree of certainty in a world riddled with tricksters of this nature.

Heard of Bernie Madoff? - Some famous recent Ponzi Schemes

The largest Ponzi scheme ever uncovered, run by Bernard "Bernie" Madoff, took in over $50 billion dollars. Madoff ran his scheme longer than any other known scammer, having begun in the 1970s. Unlike most scammers, Madoff was well-known on Wall Street, as a former chairman of NASDAQ. His investors were also unusual, in that Madoff required a minimum $20 million investment. Madoff's name will likely rank with Ponzi's for the foreseeable future as one of the worst scammers in history.

When news of a Ponzi scheme breaks, the name of the perpetrator usually does not sound familiar to the general public. However, upon Lou Pearlman's arrest, many ordinary people recognized him as the man who founded several boy bands, including 'N Sync and the Backstreet Boys. Before his music career, Pearlman started 14 companies, including Continental Airlines Travel Services and Trans Continental Airlines, Inc. Pearlman sold shares and obtained bank loans for at least $300 million in all. The problem was that the corporations existed only on paper. To maintain his fiction, Pearlman also created a fake accounting firm and a fake bank branch in Germany, and falsified financial documents including tax returns.

Another scammer, Sergey Mavrodi, schemed himself into the Russian Parliament. Mavrodi, his brother Vyacheslav and his brother's future wife Marina Mureyeva founded a company called MMM, which promised dividends of 1,000% to investors in the early 1990s. In the beginning, MMM delivered those 1,000% returns, and collected $1.5 billion from at least 2 million people. When police raided MMM offices on suspicion of tax evasion, Mavrodi claimed the government was responsible for his investors' losses. He ran for the Russian Parliament, the Duma on a platform of getting the government to pay his investors back. Movradi won the Duma election, and with it parliamentary immunity. His immunity was rescinded and in 2003 he paid a $390 fine and began a four and a half year sentence in a penal colony.

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